Agriculture Committee on June 6th, 2022

[Yulia Klymenko]

The war will be long. We will not agree on any capitulation or concession of our territories. It's impossible, so the war will be long and bloody. Unfortunately, the destabilization of politics, and of food and energy security, will increase worldwide. The best way to solve all these problems—food, energy and other security—is to stop the war. For Ukrainians to stop the war, they have to win the war.

I can add to my colleague. I've heard The Economist say that 1.6 billion people are already influenced by this food crisis in different proportions. Some people are eating less. Some are eating less because of the high prices, and some of the people hunger. However, 1.6 billion, according to The Economist are now suffering from this crisis.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Duzhe dyakuyu.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Klymenko.

Thank you, Mr. Baker.

Mr. Perron, you have the floor for two and a half minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Once again, I thank the witnesses for coming.

Mr. Amosov, you mentioned in your opening remarks that we absolutely must find a way to export Ukraine's grain.

Ms. Klymenko spoke to us several times about weapons.

I also noticed that there might be a problem of compatibility between the railways.

What can you tell us about this, Mr. Amosov?

[Mykhailo Amosov]

Thank you for the question.

I agree with Ms. Klymenko that the only way to export enough grains and food abroad is via seaports. Unfortunately, our railway is not accessible and there's not enough railway capacity to export so much grain—20 million tonnes of grain in Ukraine. We should do it through European countries, such as Poland, Lithuania and even the Netherlands. It will be a much longer logistical chain than before. It will be much more expensive and take much longer. The best way is to unblock Ukrainian seaports now.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you very much.

Dr. Bogonos, would you like to answer this question as well?

[Dr. Mariia Bogonos]

Yes. The logistics problem in Ukraine, as correctly noticed by Mykhailo, is huge indeed. The width of the railways in Ukraine and the European countries is different. That's why, in order to transport through western borders, the grain needs to be unloaded from the Ukrainian wagons and put on the western machines in order to be transported further. This is problem number one.

A related problem is that the capacity of our common checkpoints at the borders does not always allow for such a procedure. The checkpoints with such facilities are limited, which puts additional limits on the capacity of the Ukrainian railway to transport the exports. This is problem number two.

Problem number three that we can point to is the capacity of the European ports to store Ukrainian grain. European ports have the facilities for the usual amount of grain that has been transported, plus certain additional storage. Now, this huge amount that can come from Ukraine is simply...there is very limited space to store it.

Ukrainian farmers have started investing in buying older storage in Europe. Of course, those producers who can assemble money to buy them try to put additional investments into buildings and storage in Europe, but this is a huge investment for them and not everyone can afford it.

[The Chair, Liberal, Kody Blois]

Thank you, Dr. Bogonos.

Thank you, Mr. Perron.

Mr. MacGregor, you have the floor for two and a half minutes.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you, Chair.

Ms. Klymenko, I would like to go back to you. You have very much identified—all of our witnesses have—the importance of securing safe passage from the port of Odessa through the Black Sea.

One of the problems is that we know Russia is engaged in criminal acts here. We know they are engaged in blackmail. The problem is that Russia has a permanent seat on the UN Security Council, which often hobbles that organization's effectiveness. What I want to know is.... In the Black Sea, you have major neighbours. You have Turkey, Bulgaria and Romania. Do you have any intelligence on what their naval forces are doing?

Outside of continuing to support Ukraine with heavy weapons, what does Canada need to do to push with international allies to try to secure that passage? Do freighters need naval escorts, etc.?

I would like to know in what practical terms we may have to work with the knowledge that Russia is going to try to block us at every turn.

[Yulia Klymenko]

We understand that Russia is blocking the UN and other international organizations. There are a lot of Russians not only in the UN but in MAGATE, which is the nuclear organization, etc.

We see these hidden links all the time. That's why we're systematically fighting against the presence of Russian employees and officials in international organizations. I'm doing it very carefully. I know all of them and I'm trying to take them out of these organizations, because they are heavily influencing decision-making, unfortunately. We can see it in infrastructure and other areas.

What you can do is jointly send a letter, make a decision in your committee or vote in Parliament to join these efforts of the convoys. They would not only be UN convoys, but U.S. and Canadian convoys. That will allow us to take grain out through the ports. This is the only sustainable and cheap way to do it, because if we go through the European ports and the European railways, etc., the price will increase because the logistical costs will be increased dramatically on the wheat. It's a commodity. Commodities are very sensitive to logistics. That's why.... The logistics cannot cost more than the price of the wheat.

I think you could join that, but my colleagues from the embassy or from the international committee will probably better understand what the practical tools are in the UN and other organizations to help with these routes. I will come back to you after our meeting. I'm not a specialist in these political international organizations.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Thank you.

[The Chair, Liberal, Kody Blois]

Thank you, Ms. Klymenko. Thank you, Mr. MacGregor.

Colleagues, that does it. We actually ran a little bit over time but I think the testimony was that powerful. I was giving a little bit of leeway to make sure that we could have full answers.

On behalf of all my parliamentary colleagues to our witnesses, Ms. Klymenko, Ms. Bogonos and Mr. Amosov, thank you so much for agreeing to participate in the study and for being able to provide that important testimony. As has already been mentioned, we stand with you. We appreciate what you've had to inform us as Canadian parliamentarians here today, and indeed I'll give one final shout-out again to our Ukrainian interns on the Hill, many of whom have joined us in person for this proceeding.

[Yulia Klymenko]

Thank you too. Thank you for your help and support.

[The Chair, Liberal, Kody Blois]

Colleagues, we're going to take just a two-minute break. We are going to bring in the next panel, so please don't go far.

[The Chair, Liberal, Kody Blois]

Colleagues, we're back. Thank you to our entire team for helping transition very quickly.

Our second panel for the second hour for the start of our study is joining us by teleconference today.

We have Paul Hagerman who's the director of public policy at the Canadian Foodgrains Bank. We have Maud Labat, trade counsellor, trade and economic section at the Delegation of the European Union to Canada. We have Maximo Torero Cullen who is the chief economist at the Food and Agriculture Organization of the United Nations.

Thank you so much to all the witnesses for their participation today.

Colleagues, we do have a procedural vote that is upcoming. We have the ability to not necessarily break at that time. I believe I have unanimous consent in the room to continue through the bells, and indeed I've talked to all of our colleagues. I think the preference is to vote by application such that we will stretch it as close as possible, given that we have these wonderful witnesses before us.

With that, I'm going to start with Ms. Labat.

You have five minutes for opening remarks.

[Maud Labat, Trade Counsellor, Trade and Economic Section, Delegation of the European Union to Canada]

Thank you very much.

Honourable members of Parliament, it is an honour for me and indeed for the European Union to contribute today to your reflection on the impact of Russia's illegal invasion of Ukraine.

This unwarranted invasion of Ukraine by Russia has once again shown how like-minded the European Union and Canada are in their assessment and in their reaction to the crisis. The European Union, like Canada, has adopted several sanctions packages against Russia, Russian entities and Russian nationals who support this war. The European Union, like Canada, is in parallel assessing the severe consequences that this war is having on the world, including on global food security.

In my remarks today, I will present three main points, first, our assessment of the situation in the European Union; second, our response; and third, how Canada as a like-minded country forms an integral part of the EU's response.

First of all, our assessment of the war in Ukraine in general is that this is really a man-made crisis and that Russia's threats and actions prove that Russia is using food, as it is using energy, as a geopolitical weapon, disregarding the lives and the well-being of people in Russia, in Ukraine and elsewhere. This war in Ukraine endangers the food security of millions of people around the world, and it is already affecting people in many countries. The first victims are obviously vulnerable populations around the world, particularly in low-income countries that depend on food and fertilizer imports.

This invasion is driving food prices up due to the increased cost of production, transport and freight insurance. Fertilizer prices have soared, including in the EU, and severely restrict their affordability for smallholder farmers in developing countries and in the EU.

Russia has also destroyed substantial food stocks production, as you heard earlier, as well as processing and transport capacities in Ukraine. We believe that the Russian military is deliberately targeting the Ukrainian agriculture sector. When Russia bombs Ukrainian fields and destroys and loots food storage, and when Russian warships block Black Sea trade routes, it not only affects Ukrainian wheat and grain exports. It also directly negatively impacts the daily lives of people in Africa and Asia.

As you heard before, the numbers may be a bit different, but our assessment is that Ukraine accounts for 10% of the world wheat market, 13% of the barley market, 15% of the maize market and over 50% of the world's sunflower oil market. We estimate that 49% of winter wheat, 38% of rye and 63% of corn to be harvested this summer is situated in zones that are at risk. Between 20% and 30% of the areas under winter cereal, maize and sunflower seed production in Ukraine will either remain unharvested or not be planted this spring. The consequence of this is that food is missing or becoming very expensive.

Some grain-producing countries are introducing export quotas. In addition, Russia, Belarus and China have announced export restrictions or bans on fertilizers and fertilizers' components, and the European Union, of course, is vigorously opposed to such trade restrictions.

Now, for us in the European Union, there is no immediate threat to food security because the European Union is a big producer and a net exporter of cereals, but the immediate impact rather lies in the increase of costs throughout the food supply chain and in the disruption of trade flows from and to Ukraine and Russia, as well as the impact on global food security.

If you take the EU's neighbourhood in North Africa and in the Middle East, both availability and affordability are at risk in wheat, which is their basic food staple. The same is true in sub-Saharan African and in Asia.

The European member states meeting in Versailles in mid-March 2022 called upon the European Commission to take urgent action to present options to address the rising food prices and the issue of global food security. On March 23, the European Commission adopted a communication on safeguarding food security and reinforcing the resilience of food systems.

Let me briefly take you through the actions that this communication sets out.

First, it presents our immediate actions to safeguard food security in Ukraine and around the world.

Second, we addressed the challenge of food stability in the EU food system with a range of measures to support our farmers and maintain affordability for our citizens.

Finally, we confirm the European agenda to make our food system sustainable and resilient for the years to come.

In the interest of time, I'll only cover the first two points, but I'm happy to answer questions about the rest.

Helping third countries and, of course, Ukraine—

[The Chair, Liberal, Kody Blois]

Ms. Labat, I apologize. We're actually at five minutes. I want to give you a bit more time, but I know that my colleagues are going to want to ask so many questions, so perhaps we'll tee them up accordingly when we get around to that.

Mr. Torero Cullen, you have up to five minutes.

[Dr. Maximo Torero Cullen, Chief Economist, Food and Agriculture Organization of the United Nations]

Thank you very much, Excellencies and other honourable members of the committee.

What I want to raise first is that, based on our global food crises report released on May 4, already in 2021 around 193 million people were in crisis, which means IPC 3 or above. In this dramatic context, we now face the war in Ukraine.

The FAO sees three major types of risks for global food security. These are derived from the direct effects of the conflict upon global food and agriculture; those that are related to macro and cross-cutting factors; and those related to humanitarian risks, which, of course, are the humanitarian risks we see in Ukraine.

The macro impacts or the level of indebtedness of countries at this point—the poorer countries—and also the linkage between energy prices and fertilizers have put a significant risk into the agricultural sector that we didn't have before. As we all know, both Ukraine and the Russian Federation are important players in the global commodity markets, and the uncertainty surrounding the conflict prompted a significant further price increase in global markets, particularly those of wheat, maize and oilseeds. This increase came on top of already high prices driven by robust demand and by high input costs because of the COVID-19 recovery.

In March 2022, the food price index reached its highest level since its inception in 1990. The FAO food price index for May fell very moderately for the second consecutive month—it dropped only 0.6% from April—and this decline was mainly due to drops in the price indices of vegetable oils and dairy products, each falling by 3.5% month to month. By contrast, the cereal price index rose by 2.2% from April, reaching an all-time high and surpassing the March 2022 peak. The meat price index also increased, but very modestly, by 0.5%.

Export forecasts for wheat for both Ukraine and the Russian Federation were revised since the start of the conflict, and other market players, most notably India and the European Union, increased their exports. This partially compensated for the exports lost from the Black Sea region, leaving a relatively modest gap of about three million metric tons in the case of wheat.

The impact of the current crisis was significant for wheat-importing countries that were highly concentrated on Ukraine and the Russian Federation. Countries that are heavily reliant on wheat imports include Turkey and Egypt but also a number of sub-Saharan countries, including Eritrea, Somalia, Madagascar, Tanzania, Congo and Namibia. These countries need to identify new suppliers, which could pose a significant challenge, at least in the next six months. Also, of course, northern Africa and some countries in South Asia were significantly dependent on the imports of wheat from Ukraine and the Russian Federation.

While wheat is an important staple in North Africa, it is not necessarily an important foodstuff in sub-Saharan Africa, with some exceptions, although the food price import bill has increased because there are also inputs for feedstocks. Also the oilseeds have increased significantly the level of the food-importing bills of these countries. Despite this, there are food crisis countries represented here, which are also partly dependent on the imports from these two countries. Countries which are in emergency today were also import dependent on these countries.

Maize exports from Argentina, the U.S.A. and South Africa were forecasted to increase. Overall, the level of gap that we have today is around eight million metric tons. Maize export prices surged in March to their highest level on record in response to the abrupt suspension of exports from Ukraine, and maize prices fell a little bit later in April, but very slightly, keeping to the highest levels that we have to date. Of course, in global oilseeds, Ukraine and the Russian Federation export around 63% of global oilseeds, putting significant pressure also on India's market.

One very important topic is fertilizer prices, which have also increased significantly, and fertilizer affordability has decreased significantly. This is a reflection of the increase in gas prices and also of the export restrictions by the Russian Federation, which is the first exporter in the world of nitrogen, the third of phosphorous and the second of potassium. Key cereal and high-value commodity exporting countries like Brazil, Argentina, Bangladesh for rice, and others are import dependent on fertilizers from the Russian Federation, with levels that vary between 70% to 20%.

Moreover, the primary challenge for Canadian and U.S. farmers is the price of fertilizers. Soaring natural gas prices have pushed up the cost of nitrogen-based fertilizers, such as ammonia, which jumped from $700 a metric ton in August 2021 to more than $1,600 in May 2022. The price of potash, rich in potassium, has also also hit records of above $1,100.

What we are observing here is not only putting a challenge on food access but also putting a huge challenge on food availability, which is our major concern for the next year, for 2023. Not only that, but we are seeing levels of export restrictions that are around 17% ,or a little bit more, of all the calories being traded. This creates a significant challenge, in addition to the increase in oil prices and diesel fuel, which have increased substantially, and also in kerosene in many countries in Africa at this point.

All these situations have put us in the position where we need to react quickly to minimize the potential risk that countries are facing. We need to, first, support the ability of Ukraine to farm, harvest and export. We need to provide humanitarian assistance to the country. We also need to refrain from imposing export restrictions and recommit to AMIS, so that we have more transparency. We need to ensure that any measures taken to address the crisis do not exacerbate food insecurity but, on the contrary, increase resilience. Finally, we need to actively identify ways to make up for the potential future gaps in global markets and work together to foster sustainable productivity increases where possible to avoid, as I was saying before, a problem with food availability in 2023.

Thank you very much, Mr. Chair.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Torero Cullen.

We'll now move to Mr. Hagerman for up to five minutes.

It's over to you.

[Paul Hagerman, Director of Public Policy, Canadian Foodgrains Bank]

Thank you.

The food crisis that the previous two witnesses have so adequately and so well described is not new. This is almost a repeat of what happened in 2008 with food prices becoming sky-high, countries putting on export restrictions and millions of people forced into poverty. At that time we saw that infant mortality rose. In order to go to work, people pulled their kids out of school, and there were food-related riots in dozens of countries. This happened 14 years ago. The causes were slightly different. It's happening again now. This should be no surprise, because there are problems with the global food system.

One of the biggest problems is that many developing countries have been relying on food imports instead of building up their own agriculture. An example of this is that across Africa, the average yield of corn is only one to two tonnes per hectare. Compare that with 10 tonnes per hectare in Canada. There are lots of opportunities to increase yields and to increase productivity in developing countries, but the investment has not been there.

One of the reactions to the food crisis in 2008 was that the G7 and other countries agreed to invest billions of dollars in food security in developing countries to address what they referred to as a decades-long lack of investment. Canada doubled its aid for agriculture at that time. Unfortunately, that priority lasted only three years. By 2013 the aid dollars had dropped back down to their precrisis levels. In developing countries, the crop yields remained low, livestock diseases took a toll, and the brightest young people saw their future anywhere except on the farm.

In 2008 the crisis was caused largely by weather factors. This time it's being caused by Russia's invasion of Ukraine, but we're seeing the same thing, this low investment in agriculture.

I want to focus on what Canada can do to help developing countries, because that's what our expertise at the Foodgrains Bank is in. Our goal is to have a world without hunger. Last year we served nearly one million people in 33 countries through a program working with food assistance, nutrition, agriculture and livelihoods.

Your study is asking what the impact of global food insecurity is and what can Canada do. I won't repeat the numbers of people who are hungry—the previous witnesses did that very well—but let me remind you that those numbers are going up every month.

In Ethiopia, the cost of a food basket for a family rose by 64% between 2019 and March of this year. In Kenya, we're seeing that cooking oil has doubled in price. The commodity suppliers we go to used to guarantee their prices for six months. Now they guarantee them for only one or two months, if at all, because prices are so volatile. This means that Canada's aid reaches fewer people than before, even though more people need help.

People are making tough choices. Some are shifting away from protein-rich foods and just focusing on starch—rice and corn—and nothing else. It fills the belly, but family nutrition suffers. People pull their kids out of school. They borrow money at high interest rates. They sell their livestock. These things help in the short term, but they have long-term costs.

I have two recommendations for Canada to deal with this crisis now.

In the short term, Canada needs to increase humanitarian assistance, especially for food. Canada commits money for food assistance through an international treaty called the Food Assistance Convention. Our minimum commitment is the same now as it was nine years ago, even though the drop in the value of the Canadian dollar and the rise in food prices mean that money feeds only half as many people. Canada should bump up food assistance and consider something like pegging our food assistance to the food price index that Mr. Cullen talked about. As food prices rise, we give more.

Second is that, in the long term, Canada should focus more on agriculture and food security in the aid program and on helping developing countries become less dependent on imports. Our own organization, Foodgrains Bank, for decades has worked with tens of thousands of farmers across Africa, most of them with two hectares or less of land. From our own experience, we know that these small-scale farmers can significantly increase production. In fact, most smallholders can expect at least a doubling of yields in only a few years. That's more tons of grain grown in Africa. It's also better livelihoods for poor families, and it's improved climate resilience.

Thank you. I'll end my comments there and await questions.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Hagerman. You're right on time. Well done. That's a gold star.

We're going to start with questions.

Colleagues, the bells may start, but as we agreed, we're going to go as far as we can. I will work with the clerk accordingly.

Mr. Epp, we'll go over to you for six minutes.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair.

As it is with Mr. Baker, this study and this war are personal. All four of my grandparents were born in Ukraine. I've been there three times.

Testimony in the earlier panel focused on grains and food and vegetable production from the Kherson, Zaporizhzhia and Melitopol regions. I've visited that area of the world three times and put my hands in the soil. This is very personal for me.

Also, in the interest of transparency, I worked with the Canadian Foodgrains Bank for five years prior to being elected.

Mr. Hagerman, it's good to see you again. I'd like to begin my questioning with you.

You mentioned that Canada has not increased its minimum commitment for food assistance for several years. Can you compare us to other countries in the world? How are other countries responding?

[Paul Hagerman]

Thank you.

The Food Assistance Convention, as I said, is an international treaty that has about 15 countries signed on to it. Canada is the third-largest contributor. The two biggest ones are the U.S. and the European Union. Both of those countries have made major increases in their commitments over the past several years. They're now giving 30% to 40% more than what they did nine years ago, when the convention began.

Canada's minimum commitment is flat. As I said, that's the minimum commitment. Canada usually gives higher than the commitment, but there's nothing to stop a future government from dropping down to that minimum level.

We're suggesting that Canada should peg its minimum closer to what it's currently giving. It wouldn't actually cost any more money. It's more of a political commitment to say that we recognize this need, and we'll contribute at this level and peg it to the food price index. Then, if food prices go up, Canada's commitment goes up as well, and we can continue to feed just as many people.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

Following up on that, you talked about Canada's ability to perhaps help other countries double and hopefully even triple their yields. I know from my own experience, some of that success in Ethiopia.

How do we do that? What's the process, and how can the Canadian government support those efforts?

[Paul Hagerman]

Thank you.

As I said, our own program at the Foodgrains Bank has a lot of experience in this. We've dealt mostly with methods called conservation agriculture—any Canadian farmer will know what I'm talking about—with minimum tillage and soil cover and crop rotations.

The principles are the same, whether you're dealing with a thousand hectares or half a hectare. The tools are different, of course. However, using conservation agriculture, we have worked in about a dozen African countries, with close to 100,000 African farmers. We find that it's a knowledge-intensive approach that doesn't require them to purchase a lot more inputs. Once they've learned it, then they can keep practising it year to year.

It often spreads to neighbours—what we call spontaneous adoption. People who were not even in touch with our extension agents are now picking up these techniques and passing them on. Yields increase by an average of two to three times. Sometimes yields increase by five times over a period of only a few years.

Conservation agriculture is one knowledge-based approach. We also have experience with a variety of others, and lots of other organizations have as well, such as agroforestry and associations between crops and livestock. Think about fish as livestock as well, so fish ponds and crops, etc. Intercropping between maize and legumes helps them both. There are a variety of techniques that are knowledge intensive rather than input intensive, which can dramatically increase yields beyond that one or two tonnes per hectare and much higher than that.